If you're someone who prefers to work for yourself, you may have established a great career as a self-employed person. However, you might have found that being self-employed presents certain challenges. For example, it can make it more difficult to qualify for various types of loans, including home loans. This shouldn't stop you from buying a home, if that's what you're interested in doing. Instead, follow these tips to increase your chances of getting a mortgage when you're self-employed.
Gather as Much Documentation as Possible
Since the mortgage company can't call an employer and ask them to verify your employment and income, you're going to have to prove it yourself. Gather up your bank statements, tax returns, and any other documentation that you have related to your income. The more documentation that you have to prove that your income is what you say it is, the better. Don't just bring in recent documentation, either. It's best to establish that you have been successful as a self-employed person over an extended period of time.
Be Prepared to Explain Your Business
Generally, a mortgage lender is going to want to know a little more about what you do for a living as a self-employed person. Therefore, it's a good idea to be prepared to provide more information about this.
Choose the Right Mortgage Company
Some mortgage companies are more lenient about working with people who are self-employed than others. It's a good idea to do your research about different mortgage companies so you can find one that will be more likely to approve you for a loan. If you get turned down by the first lender that you talk to, you shouldn't completely give up on the idea of buying a home as a self-employed person. Instead, you should look for another lender who might be more friendly to your situation.
Work on Your Credit Score
Whether you're self-employed or not, a mortgage lender is going to look at your credit score. You may find that it's easier for you to get approved for your mortgage if you have a higher credit score, so do what you can to clean up your credit before applying for a mortgage. Also, be aware that not only will having a better credit score help you get approved for the home loan that you want, but it's also a great way for you to reduce your interest rates too. This matters since it heavily impacts how much you will pay over the length of time that you have your home.
Contact a lender that offers self-employed mortgages to learn more.